Question 1

Pension plans represent the single largest group of investors in the stock market.

Accepted Answer

A) True 
 B)False

Question 2

The principal asset held by mutual funds is corporate bonds.

Accepted Answer

A) True 
 B)False

Question 3

Hedge funds are essentially regulated investment companies that almost anyone can start.

Accepted Answer

A) True 
 B)False

Question 4

Sales finance companies make personal cash loans to individuals.

Accepted Answer

A) True 
 B)False

Question 5

In cash balance pension funds employers typically make a hypothetical contribution to an employee's retirement account equal to:

Accepted Answer

A)  A percentage of that employee's annual salary 
B)  The employee's monthly salary 
C)  The employee's weekly salary 
D)  The employee's hourly rate 
E)  None of the above 
A)  A percentage of that employee's annual salary 
B)  The employee's monthly salary 
C)  The employee's weekly salary 
D)  The employee's hourly rate 
E)  None of the above

Question 6

Finance companies that make direct loans to consumers by purchasing installment paper from dealers are known as:

Accepted Answer

A)  Consumer finance companies 
B)  Sales finance companies 
C)  Commercial finance companies 
D)  Small-loan companies 
E)  None of the above 
A)  Consumer finance companies 
B)  Sales finance companies 
C)  Commercial finance companies 
D)  Small-loan companies 
E)  None of the above

Question 7

Today, the largest life insurers are converging with other financial-service industries to form huge multi-product businesses.

Accepted Answer

A) True 
 B)False

Question 8

Loans made by consumer finance companies are considered to be more risky than consumer installment loans granted by banks, credit unions, savings and loan associations and other installment lenders.

Accepted Answer

A) True 
 B)False

Question 9

Most new insurance companies in recent years have been stockholder owned.

Accepted Answer

A) True 
 B)False

Question 10

A source of funds drawn upon by many life insurance companies in recent years that promises a fixed rate of return for a stipulated period is called:

Accepted Answer

A)  NIFs 
B)  Variable Annuities 
C)  GICs 
D)  Universal insurance 
E)  None of the above 
A)  NIFs 
B)  Variable Annuities 
C)  GICs 
D)  Universal insurance 
E)  None of the above

Question 11

The insurance principle states that certain risks (such as the risk of death) are highly predictable for any one individual.

Accepted Answer

A) True 
 B)False

Question 12

The insurance principle states that individual risk can be predicted with great accuracy.

Accepted Answer

A) True 
 B)False

Question 13

A recent, growing trend among mutual life insurance companies is:

Accepted Answer

A)  To use less and less reinsurance 
B)  To limit the number of policyholders/owners 
C)  To convert to stock companies 
D)  To use high-yield debt as a hedge against inflation 
E)  None of the above 
A)  To use less and less reinsurance 
B)  To limit the number of policyholders/owners 
C)  To convert to stock companies 
D)  To use high-yield debt as a hedge against inflation 
E)  None of the above

Question 14

Business loans are the most important financial assets held by finance companies.

Accepted Answer

A) True 
 B)False

Question 15

Recently, a highly controversial form of pension plan, the cash balance plan, has appeared in an effort to:

Accepted Answer

A)  Reduce the employer's cost 
B)  Increase the employer's flexibility 
C)  Possibly reduce older employees payout 
D)  All the above 
E)  None of the above 
A)  Reduce the employer's cost 
B)  Increase the employer's flexibility 
C)  Possibly reduce older employees payout 
D)  All the above 
E)  None of the above

Question 16

In Europe many pension plans are required to record their assets at cost value.

Accepted Answer

A) True 
 B)False

Question 17

An example of property/casualty insurance is:

Accepted Answer

A)  Medical malpractice 
B)  Homeowner's insurance 
C)  Worker's compensation 
D)  All of the above 
E)  Choices A and B only
F) None of the above 
A)  Medical malpractice 
B)  Homeowner's insurance 
C)  Worker's compensation 
D)  All of the above 
E)  Choices A and B only
F) None of the above

Question 18

Mortgage banks:

Accepted Answer

A)  Originate, sell and service mortgages 
B)  Hold most of the mortgages they make in their own portfolio 
C)  Cannot cross state lines 
D)  Are restricted in the interest rates they can charge on mortgages 
E)  Are another name for savings and loan associations that more accurately reflects what they do 
A)  Originate, sell and service mortgages 
B)  Hold most of the mortgages they make in their own portfolio 
C)  Cannot cross state lines 
D)  Are restricted in the interest rates they can charge on mortgages 
E)  Are another name for savings and loan associations that more accurately reflects what they do

Question 19

A foreign insurer mentioned in the text that has been active in U.S. insurance markets is:

Accepted Answer

A)  Credit Anesco 
B)  British Royal Insurance 
C)  ANAPCO 
D)  Banque de Paris 
E)  None of the above 
A)  Credit Anesco 
B)  British Royal Insurance 
C)  ANAPCO 
D)  Banque de Paris 
E)  None of the above

Question 20

The trend toward consolidation is affecting the finance company industry today but not life insurance companies.

Accepted Answer

A) True 
 B)False

Exam 16: Exploring Various Aspects of Pension Funds, Finance Companies, and Insurance Industry

Pension plans represent the single largest group of investors in the stock market.

The principal asset held by mutual funds is corporate bonds.

Hedge funds are essentially regulated investment companies that almost anyone can start.

Sales finance companies make personal cash loans to individuals.

In cash balance pension funds employers typically make a hypothetical contribution to an employee's retirement account equal to:

Finance companies that make direct loans to consumers by purchasing installment paper from dealers are known as:

Today, the largest life insurers are converging with other financial-service industries to form huge multi-product businesses.

Loans made by consumer finance companies are considered to be more risky than consumer installment loans granted by banks, credit unions, savings and loan associations and other installment lenders.

Most new insurance companies in recent years have been stockholder owned.

A source of funds drawn upon by many life insurance companies in recent years that promises a fixed rate of return for a stipulated period is called:

The insurance principle states that certain risks (such as the risk of death) are highly predictable for any one individual.

The insurance principle states that individual risk can be predicted with great accuracy.

A recent, growing trend among mutual life insurance companies is:

Business loans are the most important financial assets held by finance companies.

Recently, a highly controversial form of pension plan, the cash balance plan, has appeared in an effort to:

In Europe many pension plans are required to record their assets at cost value.

An example of property/casualty insurance is:

Mortgage banks:

A foreign insurer mentioned in the text that has been active in U.S. insurance markets is:

The trend toward consolidation is affecting the finance company industry today but not life insurance companies.

Understanding the Financial System and Its Impact on the Economy and Markets

Financial Systems, Monetary Units, and the Role of Money in the Economy

Financial Indices, Market Information, and Economic Data

The Financial Crisis and Its Impact on the Mortgage Market and Economy

Understanding Interest Rates, Savings, and the Wealth Effect

Financial Concepts and Interest Rates

Effects of Inflation and Yield Curves on Stock Prices and Investments

Understanding Risk and Market Factors in Financial Securities

Exploring Financial Markets and Hedging Strategies

Factors Affecting the Volume of CDs

Exploring the Reserve Accounting System, Money Markets, and Financial Instruments

Exploring Central Banks and Their Impact on the Economy and Financial System

Central Banking and Monetary Policy: Exploring Tools and Strategies

Banking and Financial Services: Regulations, Operations, and Trends

Comparative Analysis of Financial Institutions and Their Operations

The Impact of Deregulation and Regulation on Financial Institutions and Banking Industry in the United States

Treasury Auctions, Public Debt, and Government Borrowing: Exploring the Us Treasury System

Corporate Bond Pricing, Market Development, and Financing Strategies

The Truth About Regulation Fd and Stock Holdings: Debunking Common Myths in the Financial Market

Flexible Savings Account Options

Mortgage Market and Mortgage Instruments

International Financial Transactions and Balance of Payments

International Banking and Financial Regulations

Exploring the Complexities of Financial Services and Regulation

Filters